In this piece, two lawyers, Oseinoma Okpeku and Olatunji Muritala, argue that the Staff Release Guidelines made pursuant to Regulation 15A of the Petroleum (Drilling and Production) Regulations 1969 negates the basic principles of employment law, fundamental rights, sanctity of contracts and international labour standards.
Introduction
On October 17, 2019, the Department of Petroleum Resources (DPR) released guidelines for the release of staff in the Nigerian Oil and gas industry (Staff Release Guidelines) 2019.
TheStaff Release Guidelines were made pursuant to Regulation 15A of the Petroleum (Drilling and Production) Regulations 1969 (as amended) (the “Regulations”).
It provides that “the holder of an oil mining lease, licence or permit issued under the Petroleum Act 1969 or under regulations made thereunder or any person registered to provide any services in relation thereto, shall not remove any worker from his employment except in accordance with guidelines that may be specified from time to time by the minister.”
By the Staff Release Guidelines, where a holder of an oil mining lease, licence or permit under the Petroleum Act seeks to disengage any of its Nigerian workers through dismissal, involuntary retirement, termination, redundancy or release on medical grounds, the approval of the Minister of Petroleum Resources through the Department of Petroleum Resources must be sought vide a formal application.
In determining whether to convey the Minister’s consent, the DPR shall conduct an investigation into the circumstances surrounding the release and the employer is precluded from publishing or advertising the release of the worker until the Minister’s approval has been given.
However, in the event that the worker resigns, voluntarily retires, dies or abandons his duty post, the employer is only required to notify the DPR.
A breach of the Guidelines attracts a penalty to be issued by the Director of DPR not exceeding $250,000.00 (Two Hundred and Fifty Thousand Dollars) and the employer may, in addition, lose its licence, permit or lease.
Intended purpose of the staff release guidelines
It appears the essence of mandating employers to obtain the approval of the Minister of Petroleum Resources through the DPR before terminating the employment of a Nigerian worker in the oil and gas sector is to prevent employers from impeding the local content policy which is a vital instrument aimed at facilitating and indigenising the oil and gas industry. Thus, the termination of the employment of oil and gas employees is now strictly placed under supervision of the Minister of Petroleum resources through the DPR.
Matters arising and practical realities scope of the applicability of the staff release guidelines
The Staff Release Guidelines define an Employer as “any organisation, company, partnership, or registered business name which holds an oil mining lease, licence or permit (or an interest therein) issued under the Petroleum Act or under Regulations made thereunder or any person registered to provide any services in relation thereto”. The import of the definition is that the Staff Release Guidelines cover employers who have permits issued pursuant to the Petroleum Act or any Regulations made pursuant to same for the provision of services in the oil and gas sector. The DPR issued the Guidelines and Requirements for the Application of Oil and Gas Industry Service Permits (“OGISP”) pursuant to Section 8 (1)(a) (h) and (9) of the Petroleum (Drilling and Production) Amendment Regulations 1988, which empowers the Director of Petroleum Resources to formulate Regulations/Guidelines from time to time for the smooth and safe operations in the Oil and Gas Industry and section 60A of the Petroleum (Drilling and Production) Amendment Regulations 1988, which provides that no company shall render or be engaged to render technical services to the Oil Industry without first being registered and issued a permit to carry out such services by the Director of Petroleum Resources.
The categories of service providers that can be issued permit under OGISP including entities that render consultancy services which include Media and Publicity, Training/Manpower Development (Basic Safety training, Software/IT, Engineering, Finance/Accounts, Management/Admin., Soft Skills Training), Community Relations, Nigerian Manpower Supply (Nigerian Professionals only), Security Services (Security equipment/devices, Pipeline Surveillance, Armed guards etc), 6. Medical Consultancy, Information Technology (Hardware and Software management), 8. Legal Services, Architectural Services, Engineering Services (0-50,000 man-hours) amongst others. Thus, the implication of the Staff Release Guidelines is that where any of the service providers is issued a permit to provide services in the oil and gas sector, the service providers would be mandated to seek the approval of the Minister of Petroleum Resources before they disengage their Nigerian staff.
Thus, the Staff Release Guidelines applies to virtually all sectors, insofar as the players in the sector have permits to provide services in the oil and gas sector. This is absolutely absurd as it would be ultra vires for the regulators in the oil and gas sector to regulate the activities in other sectors simply because the players in those sectors have obtained permits to provide services in the oil and gas sector. The Staff Release Guidelines, to this extent, is designed to usurp the powers of regulators in other sectors. If a law firm that has a permit to provide services in the oil and gas sector intends to disengage its employee, the law firm would have to seek the consent of the Minister. This negates the essence of the Staff Release Guidelines which is simply to protect local content in the oil and gas sector.
Flowing from the above, if the text of the Staff Release Guidelines is considered vis-à-vis its essence, it can be fairly argued that the Staff Release Guidelines is poorly drafted as its scope is intended to be limited to the disengagement of workers who are in the employ of oil and gas companies and does not extend to workers in other industries whose employers have permits to provide services their industry-related services in the oil and gas sector.
Disciplinary outcome bordering on gross misconduct
The Staff Release Guidelines fail to provide for situations where an employee has been found guilty of gross misconduct. From the reading of the Staff Release Guidelines, it is the case that even where an employee has been found guilty of misconduct the employer is still unable to dismiss the employee and must keep such an employee on her payroll pending when the Minister consents to such a dismissal.
Duplication of roles
If the intention of the regulation is to prevent organisations from breaching the Nigerian Local Content policy, then this is a duplication of roles as the Nigerian Content Development and Monitoring Board has powers under section 29 of the Nigerian Oil and Gas Industry Content Development Act, 2010 which obligates operators to furnish quarterly recruitment and training exercise and part of the information to be supplied include total workforce as well as leavers within the period under review.
Equation of private contracts with contracts regulated by statutes
An employment has statutory flavour when the appointment and termination is governed by statutory provision. In the case of Kwara State Judicial Service Commission v Tolani (2019) LPELR-47539(SC), the Supreme referenced its earlier decision in Imoloame v West African Examinations Council (1999) 9 NWLR (Pt. 265) 303 where per Karibi-Whyte, JSC held that “It is accepted that where the contract of service is governed by provision of statute or where the conditions of service are contained in regulation derived from statutory provisions, they invest the employee with a legal status higher than the ordinary one of master and servant. They accordingly enjoy statutory flavour”.
The import of the above decision is that once the employment or termination of a private contract is governed by regulations such as the Staff Release Guidelines requiring the prior approval of the Minister before terminating the employment of a worker in an oil and gas company, the private contract of service becomes a contract with statutory flavour. This negates the basic principle of employment which recognises three categories of contract of employment viz (i) those regarded as purely master and servant; (ii) those where a servant holds office at the pleasure of the employer and (iii) those where the employment is regulated or governed by statute otherwise known as having statutory flavour. Hence, equating a purely master-servant contract of employment with a contract regulated by statute by requiring the prior approval of the Minister before terminating an oil and gas worker is onerous and negates established labour law principles.
Vitiation of an employer’s right to terminate
The employer has the right to terminate the employment of an employee as long as reason is given for the termination for the employment as held in the case of Aloysius v Diamond Bank [2015] 58 N.L.L.R 92 decided by the National Industrial Court. This accords with Convention C158- Termination of Employment Convention, 1982. Although, the Convention has not been ratified in Nigeria, same could be applied in Nigeria as an international labour standard. Hence, subjecting the termination of an employee’s employment to the approval of third party curtails the employer’s right to terminate an employee’s employment which negates the principles of labour law as far as private employment contracts are concerned. Even where the employer in a private contract terminates the employee’s employment without reason, the termination would at best be wrongful, which would only entitle the employee to damages. However, having equated private oil and gas employments with an employment laced with statutory flavour, the implication is that where the Minister refuses to approve a termination, the termination becomes null and void which entitles the employee to be reinstated. In principle, reinstatement only applies to contracts with statutory flavour and termination termed discriminatory because of involvement in Union activities. However, with the advent of the Staff Release Guidelines, reinstatement now applies to private oil and gas employments. One can therefore conveniently conclude that no private employment contract currently exists in the oil and gas sector as all purported private contracts are laced with statutory flavour. This is absurd!
Forced Labour/Creation of a Hostile Work Environment
Another implication of the Staff Release Guidelines is that where the Minister refuses to approve a termination of employment, it would amount to the Minister forcing the employee/labour on the employer, an act which the Constitution of the Federal Republic of Nigeria 1999 (as amended) deprecates in its Section 34. Although, the construction of forced labour under the Constitution appears to apply to situations where the employee is being forced to work for the employer, the principle of equality enshrined in the Constitution suggests that the rights conferred on an employee are also applicable to the employer be it a natural or a juristic person. Hence, where an employee is forced on an employer, this could create a harsh work environment for the employee who could eventually be frustrated out of the system by simply resigning. This, in turn, could result in the institution of litigation for unfair labour practices which could have been avoided if the employer had simply been allowed to exercise its right of termination where it has valid reasons.
Punitive penalty regime
The penalty regime prescribed by the regulations are in the main unnecessarily excessive. The penalties include a fine of not more than $250,000.00 USD and may include the loss of licence, lease or permit. It is difficult to understand the rationale behind such excessive penalty. More worrying is that the fine is paid to the government and there is no mention of compensation to the individual whose feeling has been hurt by the termination.
We are of the view that a more practical approach would have been to set the penalty as the compensation to be paid to the employee if the DPR investigation does not affirm the termination.
Discrimination
The Staff Release Guidelines requires approval of the Minister where the cessation of employment relationship is triggered by employer. However, where cessation of employment proceeds from the employee, all the Minister requires is a notification. The import of this is that while the employee is given a free hand to exercise his rights of termination under the contract of employment, the employer’s right is unfairly curtailed. This is discriminatory and it negates the spirit of the Constitution.
Conclusion
The Staff Release Guidelines negates the basic principles of employment law, fundamental rights, sanctity of contracts and international labour standards. This could retard the rate of investment in the oil and gas sector and we advise that same should be immediately reconsidered by the DPR.
- Okpeku and Muritala wrote from Lagos
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